Ch9_market_research_NPD

Innovation Management and New Product Development : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 1 Innovation Management and New Product Development Market research and its influence on new product developement
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 2 Market research and its influence on NPD Learning outcomes Understand the contribution market research can make to NPD process Identify the benefits and weaknesses of consumer new product testing Understand the significance of discontinuous products Recognise the role of switching costs in new product introductions
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 3 Market research and its influence on NPD Content of presentation Market research and NPD New product testing Techniques used in consumer testing When market research has too much influence Discontinuous new products ?
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 4 Market research and its influence on NPD Content of presentation Technology intensive products Breaking with convention and winning new markets When it may be correct to ignore customers Striking the balance between new technology and market research The challenge for senior management
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 5 Market research and its influence on NPD Market research and NPD In the NPD process the activities of concept testing, prototype development and product testing are inter-linked Product concepts are developed into prototypes and redeveloped following inputs from production or R&D Product prototypes are changed as a variety of market imputs are received
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 6 Market research and its influence on NPD New product testing The main objective is to estimate the market’s reaction to the new product under consideration Factors: The market Purchase intention Improvement to the new product
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 7 Market research and its influence on NPD New product testing Customer’s needs and preferences: Basic needs: those that a customer would expect Articulated needs: those that a customer can readly express Exciting needs: those that will surprise customers and are not being met by any provider
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 8 Market research and its influence on NPD New product testing Food industry: developers of new products and user of consumer research In the food industries a new product not liked by consumer may be a potential flop, in other industries initial rejection by consumer may not be a good indication of future success
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 9 Market research and its influence on NPD Techniques used in consumer testing Concept tests Test centers Hall tests\mobile shops Product-use test Trade shows Monadic tests Paired comparisons In-home placement tests Test panels
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 10 Market research and its influence on NPD When market research has too much influence Only extensive consumer testing of new product can help to avoid large-scale losses Most new products fail in the market because consumer needs and wants are not satisfied
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 11 Market research and its influence on NPD When market research has too much influence Many major market innovations appear in practice to be technologically driven If potential customers are unable to understand the product, market research can only provide negative answers Consumers frequently have difficulties articulating their needs Suppliers as well
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 12 Market research and its influence on NPD Discontinuous new product Innovations that differ from existing products in the specific field sometimes create entirely new markets and require buyers to change their behaviour patterns Such products usually require a period of learning on the part of the user
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 13 Market research and its influence on NPD Discontinuous new product Selection of respondents and understanding of the major innovations Consumer may not understand what needs the new technology can satisfy Experts are better able to understand potential benefits
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 14 Market research and its influence on NPD Discontinuous new product In the case of discontinuous product innovations the use and validity of market research is questionable Technology-push model of innovation: products that emerge from a technology-push approach are generated with little consideration of the market
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 15 Market research and its influence on NPD Discontinuous new product We often view a product in isolation from its context, the way it is used and the role of the customers-supplier relationship Product developers and product testers need to recognise that a product will be viewed differently by channel members and by end-users
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 16 Market research and its influence on NPD Technology-intensive products A technology push approach to product innovations can allow a company to: Target and control premium market segment Establish its technology as the standard Build a favourable market reputation Determine the industry’s future evolution Achieve high profits
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 17 Market research and its influence on NPD Technology-intensive products Technology-intensive products shift market structure, require consumer learning and induce behaviour changes Difficulties for consumer if they are asked to pass judgement: new information is interpreted in the light of one’s prior knowledge and experience
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 18 Market research and its influence on NPD Technology-intensive products Installed base effects: discontinuous or radical product innovations frequently have to overcome the currently installed technology base. Switching costs: one time cost to the buyer who converts to the new product, it may be a significant impediment to the adoption of a new consumer product
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 19 Market research and its influence on NPD Breaking with convention and winning new markets Many companies were successful because they took the decision to ignore their customers’s view: success for new products suggested that customers were unable to peer into the future Market research results frequently produce negative reactions to discontinuous new products
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 20 Market research and its influence on NPD Breaking with convention and winning new markets Market research can be used to support conservative product development decision making Emphasis on cutting costs and improving efficiencies in the immediate future, rather than on creativity and development of innovative new product ideas for the long term
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 21 Market research and its influence on NPD When it may be correct to ignore customers The traditional NPD process costrains rather than facilitates innovative thinking and creativity Over-emphasis on minor product modifications and on competition that tend to focus on price
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 22 Market research and its influence on NPD When it may be correct to ignore customers Large companies are not short of new ideas, the problem lies in deciding in wich ones to invest: market research is used to justify decision to senior managers In small companies new product ideas are scarce: hence such companies support ideas based upon their intuition and personal knowledge
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 23 Market research and its influence on NPD Striking the balance between new technology and market research Market research provide a valuable contribution to development of innovative products, the difficulties lie in the selection of research methods Customers respond positively to what is familiar and view the high costs of new technology in a largely negative way Good management should be capable to select the appropriate market research techniques to avoid superficial reactions
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 24 Market research and its influence on NPD Striking the balance between new technology and market research Firms become myopic towards their current cusomers and fail to see the larger slowly changing market It is a responsability of senior management to try to understand the wider and future environment of the firm
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 25 Market research and its influence on NPD The challenge for senior management Applying pressure on product managers to seek high profits from quick volume sales rather than develop business opportunities for the future is a common mistake made by senior management A heavy reliance on market reserch to minimise risk when developing new products ideas contributes to an early grave for product ideas
Market research and its influence on NPD : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 26 Market research and its influence on NPD The challenge for senior management Adjustments wich need to be made in order to incourage innovation in large companies may break some of the established rules of corporate life They will require changes to internal systems and structures and the culture of organisation
Conclusion : Fabio Emanuele Noia Innovation Management and NPD 2004-2005 27 Conclusion We have learned the following concepts: Great care must be exercised in market research, for there are times when market research results produce negative reactions to discontinuous new products that later become profitable for the innovating company Some new products have particularly difficult problems to evercome if they are to be successfull, like switching costs

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